Retiree insurance change a 'win/win'

By M.E. Jones, Correspondent

Posted:
09/30/2013 05:27:36 PM EDT

SHIRLEY -- Switching supplemental coverage the town provides its retired employees -- for which it pays half the premium -- from Medex-3 to Medex-2 will result in savings for both. This, according to Jill A. Gallant-Shaw, senior account executive for the Massachusetts Interlocal Insurance Association (MIIA), a health benefits trust offering services to communities that belong to the Massachusetts Municipal Association.

Monday night, Gallant-Shaw and Treasurer Kevin Johnston explained the proposed new plan to selectmen in terms of comparative benefits and costs, including out-of-pocket expenses for retirees and overall cost to the town. Promised savings would be at least $167,000 a year on the town side.

After hearing the presentation and asking a couple of pointed questions, selectmen voted to make the change as recommended. "I see it as a win/win for everybody involved," David Swain said.

Currently, the town's 50 percent share of Medex-3 premiums for 22 retirees comes to $633.85 a month, Gallant-Shaw said, versus $392.55 under the proposed new plan design. The change consists of Medex-2 medical coverage and a PDP prescription drug plan.

"Two thirds" of the members in the MIIA trust use this package, she said. "It's a nice savings" for both the municipalities and the retirees.

She said the town's bill would be even lower when new figures are established after the first of the year. She expects to have those numbers available by next week.

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Coverage is as good as under the previous plan, she continued, with no "donut hole" gap. It's very similar to the HMO offered to active employees and is only available to municipal groups. "You can't buy it in the private sector," she said.

As she explained it, the new plan offers the same medical coverage as the old plan, with no network limitations or referrals needed, same as now. Retirees can continue to see their current primary-care doctors, choose specialists and go to any medical facility in the country.

The only change for the retirees will be in prescription drug coverage, with some co-payments where there are none now. On balance, however, lower monthly premiums should offset the co-payments, Gallant-Shaw said.

An MIIA team will conduct a presentation for retirees later this fall, she said, and will answer any and all questions they have about the new plan, collectively and individually.

Taking this move now also reduces the town's so-called "OPEB" or post employment benefits liability, Johnston said, for which Town Meeting established an account a couple of years ago but has not yet funded.

And it will cut down on paperwork in the treasurer's office.

Johnston said it takes a substantial amount of time to gather data and prepare forms required to apply for government subsidies the town has turned to each year for relief from the high cost of providing top tier Medex coverage for retirees. And, he pointed out, it's a government program that might not always be there.

As it is, the reimbursement timeframe for the grants is typically a fiscal year or more in arrears and the amount the town gets back is about $10,000 or $11,000, he said, far less than the projected annual savings from switching plans.